Thinning, septation, and change in cellular composition of the saccules that compose the gas-exchange region of the immature lung, and the postseptation increase in alveolar number and average alveolar volume, effect the relation between the gas-exchange surface area (Sa) and the organism's metabolic rate (VO2). Our studies demonstrate, or are consistent with, the following new information and ideas: 1) means "other" than septation produce most alveoli formed during the period of "septation"; 2) dexamethasone (Dex) treatment during septation irrevocably blocks septation, and slows the rate of "other" means of forming alveoli even after Dex-treatment is stopped; 3) the Dex-induced effects include the premature completion of the seemingly normal changes in the relative cellular composition of the alveolar wall; 4) clinically relevant short- term prenatal treatment with Dex does not affect Sa at birth but is expressed as diminished postnatal increase in Sa; 5) thyroid hormone, in doses that do not increase VO2, accelerates the postnatal increase of Sa. We will continue to take advantage of new stereological methods to: 1) test the hypothesis that short-term (3 days) Dex treatment in late gestation or during the period of "septation" can prematurely and permanently terminate (or diminish) septation or "other" means of forming alveoli and that this effect occurs with premature completion of the normal developmental evolution of the absolute cellular composition of the gas- exchange wall; 2) determine the architectural mechanism by which thyroid hormone, in non-calorigenic doses, accelerates the early postnatal increase in Sa, elucidate its effect on the cellular composition of the gas-exchange wall (contrasting it with the effect of Dex), and, test if thyroid hormone can overcome the Dex-impairment of alveolus formation and increase of Sa; 3) "mark" already formed lung to test if, after septation, new alveolus formation occurs mainly at the alveolar-pleural interface. We think our prior results show the feasibility of our approach, and, the strong likelihood we will provide substantial new insights into a neglected but physiologically and clinically important aspect of lung development.